‘I just made them up,’ convenience store-based tax preparer is alleged to have told IRS

BY LEVI PULKKINEN, SEATTLEPI.COM STAFF

Published 6:12 pm, Sunday, April 13, 2014

A Kent tax preparer accused of cheating his clients and the IRS has been indicted on federal fraud charges.

Running a tax preparation business out of a desk at the back of a Kent convenience store, Ryan Lanh Yann is alleged to have taken advantage of immigrant clients unfamiliar with U.S. tax laws. Yann, 60, was indicted late last week in U.S. District Court following a long-running investigation.

According to court papers, Yann admitted to stealing at least $40,000 in fraudulently obtained tax refunds in 2012. He is alleged to have doctored his clients’ tax returns without their knowledge to enhance their refunds, then kept $300,000 for himself.

The investigation began in 2012 after IRS auditors reviewed 99 tax returns prepared by Yann. Thirteen misstated the amount of money the taxpayer had earned in the prior year.

Writing the court, an IRS criminal division special agent said those 13 clients were either paying too little in taxes or receiving too large a refund. The agent said at least three appeared to know about the fraud, while the other 10 were ignorant of the problem.

Investigators then determined Yann had stolen at least $39,000 from the tax refunds he’d secured for his clients, the agent continued. Agents then ran a sting operation against Yann in which agents posed as reluctant taxpayers.

Shortly before Tax Day 2012, an undercover agent posing as a customer went to Asian Planet Food Market in Kent, where Yann kept his office. According to court papers, Yann prepared a tax return for the undercover agent that falsely claimed business expenses.

In a search warrant affidavit filed in U.S. District Court, the IRS agent said Yann was caught on camera explaining how he cooked up a $3,275 for the undercover investigator. According to the affidavit, Yann told the man he didn’t have to report cash income to the IRS.

Yann is alleged to have doctored a second tax return for another undercover agent two days later. According to court papers, Yann told the undercover not to report business income.

Questioned by investigators in June 2012, Yann is alleged to have admitted to falsifying tax returns.

“I just made them up,” Yann told the IRS, according to agent’s statement.

According to court papers, Yann admitted to stealing $40,000 from his clients in 2012 alone. He purportedly told investigators he used the money to pay his mortgage and other bills.

“Most of the clients were not aware that a portion of their tax return had been diverted into Yann’s bank account,” the IRS special agent said in the Jan. 24, 2013 affidavit. “Yann stated that he took advantage of some clients who he thought likely did not understand how the tax system works.”

Noting that many of Yann’s clients had immigrated to the United States, the special agent said most of the 18 customers interviewed by the IRS said they didn’t know Yann was taking a cut of their refund for himself. Many claimed Yann provided the IRS with different tax returns than those he presented to them.

IRS investigators seized Yann’s papers in late January 2013 during searches of his home and office. An indictment against him was unsealed Friday, just in time for Tax Day on Tuesday.

Yann faces 14 fraud-related counts as well as two counts of aggravated identity theft. He made an initial appearance in court Friday and is expected to return in coming days.